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tv   Up W Chris Hayes  MSNBC  December 29, 2012 5:00am-7:00am PST

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hello from new york, i'm chris can hayes heave with richard wolffe and the great heather mcgee, carl smith, the university of north carolina chapel hill, contributor to a blog. and socket sony, the migrant workers advocacy group. the latest gdp provisions looks like the economy may finally genuinely be in a real recovery. it increased by 3.1%. of course, we've been here before many times over the past four years and each time it appears that the economy is going to achieve a philosophy,
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it gets pulled back to earth. there are two issues. cyclical, how and when we will once achieve full employment and strong growth and structural issues, what aspects do the fundamentals of our country work and not work. barack obama has insisted it won't be enough to cover the downturn and the economy needs fundamental reform and invention. >> i know that we'll have to overcome our doubts and our divisions and we're going to have to overcome a determined opposition of powerful special interests before we can truly reform a broken economy and advanced opportunity. >> if we take seriously the idea of emerging from the great crisis into a radically new economy, be there are core questions about what that economy will look like that almost no one in our political class is asking. what is the proper role of finance, a sector that accounted
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for an astounding report of corporate profits. do we want one of made of distributed enterprises with new business and business model. in other words, if we were creating a new economy for the future from scratch, one that was prosperous, what would it look like. i'm really happy to have you big thinkers here to talk about this. the first one i want to talk about is work. we had some interesting information on contingent work. this is from back in mid-last decade. 30% of the workforce could be classified as contingent workers including roughly 13% part-time works, 7% independent contractors and 5% of on call and contract company workers. i have to say, i see this in my peer group, the old employment contract, the contract that
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binds employee and employer being totally ripped up. everyone i know who is my age, unless they are a lawyer or professional in that way, either is now or has in the recent past or will in the future be essentially a contract worker. i was for the first years of my job. i thought i was the richest man in chicago. this is a miracle. you mean, it just goes in there and then you just go and then it's there. you don't get a check and have to walk it there and sign and chase it down. but that is, i think, increasingly the direction that all work is going. >> chris, this is the most inconvenient truth about the new economy. a third of the workforce is contingent workers. that means they are not working directly for the people who are benefiting for their labor. they are being sourced. they are temporary workers. what this means is they have no one to bargain with. they have to reinvent bargaining. the flip side is that not only
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is the unemployed have been unemployed for over six months. >> i think there's also -- there's two sides to this, right? because at one level it increases uncertainty tremendously. >> that's true. >> but there's also another level and a class distinction here. for workers that are doing fairly well, like if you're a freelance designer in new york, there's something attractive about this economy in which you are not subject to the structures of unemployment. you can work in your bath robe and you are the master of your own time. >> for a long time it was why are you having these contracts? people are making arrangements that are efficient for them.
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maybe you like to work in your bath robe, maybe you don't. you would think that's the natural way that an economy would work. instetd, instead, economies have built these large corporations which were command and control and we have a lot to explain about that. and i think the insecurity was -- >> a lot of that was probably insecurity. it's easier for people to contract out, easier for people to connect through online and things like that and that's pushing people towards the direction of working as freelance. and the other thing is that for workers at the lower end, wages are falling so fast that breaking that security relationship is a way to sort of slow the fall in wages. if you were to maintain -- it costs something. there's an efficiency loss. if you are able to maintain that relationship in order to have a job, wages have to be even lower. so as the wages fall -- >> do you agree with that,
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richard? >> for me it's a simple explanation. it is convenient to capitalists to save on labor costs and once you had shifted in the 21st century from paying people a wage, end of story, to paying people a wage and also substituting for wage increases, a package of benefits, then it became clever for a capitalist to save on all of the benefits by switching to contingent labor because they didn't have those benefits. they hadn't developed contractually over time. >> it's not even clever. it just costs less. >> i'm trying to be polite for people who are squeezing in order to get an advantage because they are moving production out of the country in large numbers. they are able to dictate to the mass of workers, a set of condition that is the cheapest way to get the work done. >> there are two missing parts of that. one is the power and ability to do this. that has to do with the fact that most workers cannot bargain
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with either their client or their employer without any kind of structure to make that happen and that's obviously the story of the decline, the sort of planned destruction of organized labor in this country. but the other pieces that we as a country have seen that trend happen and let's detach from the employer safety net, let's say of course you're going to be unemployed for weeks, months of a year, and you're going to have much more generous unemployment insurance, more kind can of like the denmark flex security, the idea that half of america's workers are not eligible for unemployment benefits, given that unemployment is the new normal even before the recession, periods at least is a failure of our policy to update. obviously there's portable retirement security that is going to be happening. >> i want you to respond to this because the historical context
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is that we had this strange historical contingency arrive, particularly from world war ii and in the '80s has been unraveling ever since, the provision of the things that in other industrialized democracies, the model in which you have a union bargaining with a big capitalist firm and you come to this internal social contract for the employees. right? we work for you and get things like health care and retirement and security and other things. now this relationship of employment is coming tomorrow a start. one of the things that you can do is go to the model that it is a provision of the state and that would lessen the blow to the content jent workers. >> and that would be an outgrowth that the model has been so incredibly profitable.
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it's resulted in gains for investors and for companies. there's a lot of money on the table to be used to create the kind of dynamic social safety net. the problem is we've sort of let it stay off the table in term of revenue and we can afford to provide the sort of optimal sort of career labor exchange through the government. >> that's right. and to your point, you've used the word flexible. let's take a look at who this flexibility works for. it works well for the employers, for the companies. but the rise of contingent labor, the rise of long-term unemployment and collapse of the local labor market have created incredible problems for workers. that flexibility has not worked for workers. >> there are problems that workers are experiencing that probably due to globalization
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and other things, it's causing a bad scene for workers in general. but these developments aren't necessarily making it worse. they are just going along with the badness there. like, for example -- >> i don't know about that. there are 64,000 workers in georgia who are going into christmas just having been kicked out of earned unemployment benefits. why? because they are working in schools. they are the people who clean the schools, drive the buses, serve food to the kids, and they have been told overnight that they should think of themselves as getting laid off once a quarter and cannot access unemployment benefits. the state and aramark, the corporation that hires them, wants them to think of themselves as a completely separate workforce. >> hold that thought. i guess the big question on the table is, can we move towards employment that looks contingent and freelanced and outsourced? that's also equitable and outsourced? right after this break. but whetr he's climbing everest, scuba diving the great barrier reef with sharks,
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talking this morning about the next economy. what the economy should and will look like after the great recession after we go back to full employment, if and whenever that ever happens. and how that affects workers. karl, the question on the table is can we have a prosperous economy and also in this increasingly flexible freelance situation? >> people like the security of an employment relationship and as workers have had less and less bargaining power in the market they've lost wage growth and employment growth. those are separate symptoms of the same thing. it's entirely possible to provide that with high wages without those things. those are two things that people like and as they have gotten worse and worse, they have lost both. if you don't have a contingent
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job, you are poor. but it's that you are poor, you can't buy the employment security of a contract. you can't accept the low wage that you have to accept. >> there is also the problem, though, about bargain. and, in fact, in some cases it's actually -- i remember looking at a case of truck drivers that were trying to organize and actually running up against the sherman anti-trust contract. there are certain ways in which they can't collude and it's unclear how much bargaining power you can achieve. bargaining power has, historically, been very connected. >> it's the only thing -- bargaining power is the only thing that lifts up working conditions and wages. it's the only thing that historically has gotten workers a fair deal. and this is the problem. just hear me out. this is not a problem merely of low wage workers. academics who are suddenly fellows at a campus see their
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wages going down. it affects everybody. and i think the important issue here is how do we, while the economy is changing, still build worker organization and forms of power that get workers a fair deal? that's the big question. >> there's also another option which ought to be on the table. we ought to be simply trapped into the question of a secure wage relationship and a contingent wage relationship. we ought to finally grow up and question whether we want to live in a world with a wage relationship. why are there people, tiny numbers of people who are in a position to bargain over what effects the mass of people? even if you take only a little seriously the concept of democracy, that's not the way a wage ought to be determined. it ought to be determined why don't we talk about that? the mass of people decide how they want to allocate the wealth
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they produce between the wages they each take home and all of the things that the enterprise has to do? where do we get this idea that it's written in the stars that a tiny group of people called boards of directors who have an outsized ability to determine this? >> that's not the mystery. >> the question is, why do we accept this as a given rather than questioning it? well, more and more we're not. there's a very interesting fact that there are today over three million more worker owners in an employee-owned enterprise than there are union members in the private sector. so we are seeing something that was very hip when my mom was about my age, which was moving to -- which is moving to people wanting more local ownership, more democracy in their workplace and what the problem is, we aren't going to see that
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accelerate the way we need to because we're still dealing with the dominant forces of the old economy. >> there's so many issues, i think that it's questionable whether or not the boards of directors and owners have the power to actually determine wages and the reason why we think that might be true is because the share of business income that goes to wages was constant for an extremely long period of time. so at least since the 1880s up through the 1980s it was roughly 60% and it didn't change when unions changed and it didn't change when the great depression happened. so much so that when economists said this, we write this down as a constant. >> it's crucial because it changed. labor share has fallen. that's a phenomena that we have to understand. something that we write down as a constant is now falling and it can't just be unions. it was .6 before unions and .6 after unions.
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>> the reason i'm pointing to you is because i want you to address this idea of particularly for people that are doing work that is traditional low wage, not inherently but traditionally low wage work or increasingly contingent, whether this kind of model relationship is viable. >> i think it's viable. i think it's viable. i think the question is how to make it viable at the scale and you'll still have to bargain for the social conditions and the wage rates. but here's the big problem. you know, somewhere between the big dream of worker-owned coops and a retail workers al difference between a $25,000 job. >> big model, right? >> there's a reality which is that wages and working conditions are falling. co-ops have not been built to a
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scale that they can reverse that and millions of workers in the united states are trying to figure out how not to let the new economy happen to them. we're trying to figure out how to get in the driver's seat of a new economy. whether they are co-ops, can campaigns, new forms of bargaining, we're going to have to take all of those tools in our toolbox and fight for a new economy. >> none of those things have any effect on overall worker's conditions so that you can redistribute income between workers and some make more and some make less. >> with these bargaining relationships, one of the questions is, if it's clear that union workers make more money and if workers on total didn't make more money, nonunion workers make less. one of the things that happened is nonunion workers go down. you are not actually doing anything to increase overall worker share. it's falling and we think that -- we don't know exactly why. it's a huge question in
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economics. i don't think any of these things are going to do anything about that. >> hold your thought. i'll come back to you after this break. hey sis,
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richard wolffe? >> this is a game. we've all been taught that statisticians make use of what they do. a constant share of huge salary workers and wages at the top of the corporate. >> hop in there to explain. we have wages and then we have profits, right? these are different kinds of categories but you're talking about what percentage of dollar is going to wages and it's constant for a long period of time. i want to be clear here, wages is a big category in the sense
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that people who make millions of dollars make millions of dollars in wages. the point you're making is, you can say, okay, a certain percentage of the economy, this per taj of the economy that goes to wages is constant. but within that thing, there are massively different distributions. your second point? >> second point. we ought to be discussing not only what is the problem in a society that sees suddenly over recent years, and i think we all agree on that, a disproportionate increase relative to wages even allowing for all of that, why do we permit this to happen? it was rising before the crisis. it was actually getting worse in that crisis. there's no excuse for this immoral, ethical, or any other kind of ground and it's not a clear idea that it's an advantage but we seem to lack the political will to address this as a problem and to confront it. >> we don't know what is happening. >> we're also in an economy
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without principles. this is the problem. we have a sort of implicit principles that have been given to us unfortunately by the dismal signs of economics. and unfortunately, my brother -- right? >> primarily. i would say i have a share of it. 60%. but what we have is a share of principles that is implicit. the market doesn't actually reflect the different powerful players that actually make up any set of decisions that guide our economy and what we're missing, all of us as americans, we try to figure out what happened in this crash and why no one feels as secure or optimistic as they did before is what are the principles that guide an economy. are they equity? are they local controlled in any sort of security that security that is necessary for liberty? that's the kind of conversation that i think is is happening in places as desperate as container shipping on the west coast.
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>> you know, workers everywhere knows it. everyone knows that the economy is unprincipled. everyone knows that it's a plummet to the bottom. the reality is that while exists might be divided over it, workers generally aren't. while the science of economics might be a little bit dismal, the workers who are organizing across the country aren't. walmart workers this year by the thousands went on strike precisely to make a point that a group of workers together -- >> i have to push back on this. the category of workers is something that loose generalizations is troubling as well. right? walmart has 1.6 million associates, several thousands of whom i think did an admirable thing by going on strike. if we're going to talk about workers in the whole, it's a big
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category. i am a workers, right? officially, i get paid a wage. i'm a cable news host. >> for the people who depend on a paycheck for a living, i think you can start to actually say that -- you can generalize a bit there about whether the economy is succeeding. >> i'd like to hone in on places where workers are actually trying to shift the economy. >> and they are doing it by what? >> and they are doing it by organizing. in new or len, for example, after katrina, just like after sandy up here in new jersey and new york, a city turned into the largest construction site in the world. right? an entire city. and what happened? workers who were sourced through temp agencies last year in our membership, their two-person
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household income was 7,500 a year. they are bargaining for higher wages and if they succeed, they will be earning 20 to $40 an hour in that industry. that will lift conditions. that will be the rising tide. >> but, look, unless that changes the share that has to come out of some other worker's pocket. that's where the union worker's wage came from, was from the minority. >> people -- minority made extraordinary less and that essentially -- >> let me say this. >> this is a -- in economics this is very old. in early stages whenever they would trade unions, there were people who said there's a fixed pot for a worker to get. those who make a union and get it will deprive others and
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radicals, of whom i'm a part, had to come in and say there's nothing fixed about what labor gets. and you need to understand that there's a choice that all union workers and workers have to make. are you going to try to have a strategy to pull it from capital? and then there's one more step, which is, why are we constantly bargaining with capital? why don't we change the enterprise so that we are the ones who make the decisions? why do we accept this subordinated decision that seems to reduce us to arguing over one or the other bad situation? >> let me make this final point. one of the thing that we think about with the future, the big three automakers, there's these market trans aactions and then e firm. as that evaporates, i think we
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need to be thinking about what are the nonmarket institutions that replace it because labor markets don't function like other markets and if they do they end up screwing a lot of people and we have to think about what kind of collective enterprises, be if they are not a big firm, what are the big enterprises? what nonmarket activity can secure relative equity? saket soni, thank you for joining us. >> thanks, chris. the economy is growing again. that is a good thing. karl smith wants to talk about it more when we come back. ies? let me put you on webcan... ...lean roasted chicken... and a creamy broth mmm i can still see you. [ male announcer ] progresso. you gotta taste this soup. [ male announcer ] you've reached the age where you don't back down from a challenge. this is the age of knowing how to make things happen. so, why let erectile dysfunction
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productive capacity of an economy expands, when it can produce more goods and services it did this year than last year. the question is how to get the economy growing again. if we are not growing, then the people in charge aren't doing their jobs. mitt romney made his argument in an explicit part of his campaign. >> economic growth this year slower than last year and last year slower than the year before. going with the status quo is not going to cut it for the people who are struggling today. >> that presupposes that growth and faster growth is a good thing. since the dawn of modern capital lich ism, be they have pondered whether it's even desirable. prominent voices are revisiting those debates asking, is growth necessarily good and is a happy sustainable future with broadly
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and equitably distributed profitable? joining us to answer those questions is christian pa are renti, contributing editor to "the nation" and chrystia freeland, author of "plutocrat." >> partly because women aren't having so many kids anymore. i mean, pretty soon we're going to be talking about, you know, demographic winter. >> we're talking about that now. >> and one of the things that was assumed, when you're thinking about growth in the future, is assuming what will
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continue to happen is that much more quickly than people anticipated, when women get education, access to birth control and some autonomy over their lives and bodies, the birth rate really falls off the cliff. in mexico it's amazing how quickly it's happened. >> and hispanic-americans, right? >> yes, in the u.s. as well. and then there's the question of climate. can we, if we keep putting carbon in the atmosphere, and we can only put a fifth of the carbon and hope to make temperatures which i harp on all the time -- >> two degrees celsius, there's a lot that we have to leave in the ground. christian, how do you think about how compatible our models of growth are with avoiding climate disaster? >> well, you know, the limits of growth had two areas.
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one is that they were running out of resources and running out of sinks. we have found more oil, we find more resources. they have been correct in terms of the earth capacity to absorb pollution. >> what does sink mean? >> a place to put the ability to absorb -- >> the ocean has absorbed enormous amounts of c02. they were right about the plilis of the earth's ability to absorb this. but there's a problem with the rhetoric are of describing the economy only in term of growth because that conflicts all sorts of activities. if we confront climate change, to replace the fossil fuel energy is going to involve lots of investment, lots of jobs, lots of growth. what kind of growth? and in the long term there may be this question of.
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>> caller: an economy, can capitalism grow infin nightly? more immediately we have this subset of that question which is can we keep burning fossil fuels and the answer is no. >> and there's a nonenvironmental aspect to this. >> yeah. there are a lot of things that are wrong with gross domestic product. bobby kennedy talked about it in 1968 in which i keep going back and finding these kennedy quotes. it says, if we judge the united states of america by that, it counts air pollution and cigarette advertising and ambulances to clear away our highways of carnage yet the gross national product does not allow for the health of our children, the quality of education or joy of their play. in short, it measures everything except that which makes life worthwhile. it can tell us everything about america except why we are proud that we are americans. >> great quote from bobby kennedy. we're going to keep talking about growth, its limits, and
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. we're talking about the income next economy and what kind of growth we are going to have and what the limits to growth are and whether growth is producing negative consequences in the form of carbon pollution. i want to bring in juliette shore, professor of social yol at boston college. juliette, your book revisits ultimately this question of growth as the basic goal for an economy and i think in line with as much of the thinking that we talked about earlier calls it into question. >> absolutely. i think in addition to the problems with measuring gdp,
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which are very real and we've already talked about -- right now there's the question of whether we can reconcile what we need to do on the climate front, which, as you rightly point out, is to reduce carbon emissions quite significantly. with we've got to decarbonize the economy and the way we do that is expand the economy. there's really only one country that we can point to that has been able to continue to expand its economy, its gdp, and have any reduction in carbon emissions at all in the last 20 years and that's germany. other countries, which have reduced carbon emissions have done so because their economies have collapsed, places like russia, eastern europe. and for the rest of the world growth has basically meant increases in carbon. so the idea that comes from
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mainstream economics that you can decouple carbon from the size of the economy is not at all born out over the last 20 years. >> it's born out of germany. if someone can do it, it can be done, right? is that the answer? >> well, they've had very little slow gdp growth. and there they are an unusual economy. they've been able to export a lot of their -- big export surplus. >> everyone want to be germany. in the future, we will all be net exporters. >> can i make what is going to sound in this context like the naive case for growth and remind us why -- >> i want you to. >> why it's actually important? so, you know, let's stipulate yes, climate change is really important and, yes, juliet is absolutely right. it's really hard to do both at the same time but we have to be really careful to sort of -- it can be easy to say, let's forget
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about growth. all of these other things, children playing and being happy are so important. the reality is growth is essential for the poorest, most dispossessed people in the world and in the country that you happen to live in. it's essential for people in africa. it's essential for people in india, for people in china. let me just finish, heather. there's still lot of extremely poor people in the world and they need growth. that's point one. point two, as we are experiencing today, in most western industrialized economies, a period of slow growth hits people at the bottom the hardest. it hits people who have those marginal jobs and finally the group that i worry about the most is young people entering the economy in a period of slow growth. study after study has shown that just doesn't have an impact on
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you at the moment that you enter the economy, it's a lifelong impact. i'm not setting aside at all any of the -- i think the big issues with just growth -- >> no. >> if you stop with growth, growth is not enough. it doesn't cover climate change and it doesn't cover distribution. and america has experienced in the last three decades periods of relatively high growth with inequitable. but without growth, if you say let's forget about growth, i think it's much, much harder to solve the other problems. >> can i step in here and say something? >> christian is going to step in and then juliet i'm going to go to you. >> i think the two discussions about growth deposits these environmental problems as purely technical problems and overlooks power. qualitative questions around what kind of growth. i don't see how it's possible to confront climate change without significant change. wiping out the fossil fuel sector and replacing it, even if
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there's a massive reduction in consumption and changing how we travel, et cetera, et cetera is going to involve a whole new round of investment and accumulation. >> but you're reducing your technological frontier. that's the end of your case. >> no, you're not reducing your technological. you are pushing it out. >> you are able to do this but if you don't allow yourself to do carbon, that's a technology that you're taking off the table and any time you take technology off the table, your overall growth -- >> there's another analogy here. >> you're replacing it with something else. >> juliet? >> the main point i want to make is fixating on growth can overlock political questions of power. >> correct. >> who is being challenged, the fossil fuel. >> and distribution and i do think the key issue in western industrialized economy is -- >> can i say something, please? >> juliet, yes. >> the first thing, to
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christian's point, what happens to an overall growth to your story is a question mark. absolutely we've got to expand the clean energy sector and sustainable parts of the economy. but what that means for what happens to gdp is a question that we don't know the answer to now, i think. that's the first point. i absolutely agree with you about power and so forth. i think to heather's point, that's the old way of thinking and she's talking about a growth process which did raise the incomes of the poor and did provide widespread well-being. if you look at what has happened over the last 25 years, that's really changed and growth operates in different ways. so we're talking not about growth in incomes of poor people. of course we've got to do that. the question on the table is what does that i am ploy for the
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rate of growth of gdp. i mean, that's a particular measure. and the answer is less and less. and i want to throw one more thing into the hopper here is the way that you sole have the problems that she's talking about at the same time that you sole have the carbon and that has to do with the distribution of work and hours because that's one of the few policies that we can put in, which reduces carbon emissions at the same time that it expands employment, reduces poverty, makes workers better off, and improves quality of life. >> i want to make two very quick int tint jexs here. this is a place that is not enjoying very equitable growth. this more on this after a break. it's the power of pepto, but it fits in your pocket. now tell the world daniel...
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all right. two charts i want to show. one i was showing you before the break which is the increase in gdp in sarahan, africa. this is a pretty brought poor distributable growth. >> and you want to talk about -- >> but here is rising gdp in the u.s. we're talking about a very developed economy compared to the economy and rising gdp, which is that dark line there, right, it keeps going up and child poverty has not gone down. we're seeing in the u.s. that we've got growth, there's more
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economy, productive capacity of the economy is increasing. we still have has many kids who are poor and that seems to be to be a major failing and talking about gdp as a unified whole. >> welcome to plutocracy, chris. and that's what is happening. >> no one actually is after gdp growth. people want jobs or profits. these are the actual categories and measures. what's happened in the u.s. economy is that proportion of income that's gone to profits has increased while wages have stag nated and that's a question of political power. >> i think the deeper question is the fact that there's a sense in which -- i was rereading cane's on the economic prospect on our grandchildren. he's projecting forward. if you read this and other economists from back in the day,
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they are saying what is everyone going to do once there's no work. are we going to hang out are -- >> that is what is happening. i agree with christian that is obviously about -- well, maybe not obvious but it's clearly about power. even if you don't want to deemphasize the political part of the question, the example is, do you we want to move to a place where all of the smart peal run google and it's three or four and the rest of us give them massages? >> juliet is going to tell us how to solve all of this by working less right after the break. [ buzzing ]
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hello from new york. i'm chris hayes. heather mcghee, karl smith, and also joining us via satellite is juliet schor. the conceptual category that we use to think about the economy, i think it's fair to say when the numbers come out and think about is the economy in the recession, growing a little, growing a lot, shrinking, that's the way we think about the economy and we're trying to zero in about what that means and what it misses and the subconcepts inside of it for good growth and bad growth. juliet, i first came about you
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when you wrote "the overworked americans" asking why americans work so much. and i was talking about an envision in which no one is working because our robot create all of the value that we need and people have to figure out what to do with their day. you say that there's a way to get out of the bind that we are in in terms of carbon and growth and figuring out the way that we work. >> absolutely. one of my researches shows that work is concentrated in a smaller number of people. once we get out of the so-called growth imperative or the straight jacket of growth, that allows us to then ask the really fundamental questions which we've been talking about here, about how should we organize the economy? distributions of wealth and
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income. but distributions of property and opportunity and distributions of access to work. so in my mind, to avoid heather's dystopian future, we need to start talking about things like the scale of enterprise and think about how we can start shrinking that scale of enterprise because it's highly efficient to have small network enterprises rather than the giant googles and microsofts and so forth which lead us to those distopian outcomes in terms of access to income and wealth and creative work which is what she's talking about. so working is a really key there. they are central to how we can -- if we distribute those more equitably, we not only solve the power problem but the carbon problem that chris is talking about because it gives people access to livelihood and
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means of production and so forth. >> it strikes me that what you're describing is a problem of political power. this isn't a technical problem that planners can achieve. there are large firms organized that way because it's profitable and social movements have to force government to check and regulate the capital. >> let me ask you this. >> and also channel investment into new green technology to write off the old -- >> let's talk about this. let's imagine that we have a situation in which we have a real genuine carbon price. >> we have that with current epa. >> with the current epa laws. >> it's a de-facto to us. >> let's say we have that. what does that do to growth? what does that do to -- is that compatible with the continued
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growth of the american economy because the problem is, with juliet, what you said before, countries take a huge economic nosedive. the problem in selling it is precisely going around and telling people, hey, great news. we're going to tank the economy. >> i am actually a technology ee van gentlem evangelist. i think an economy with bright innovators, which happens to be the case with the united states, i think you can effective do what germany has done and actually having a high tax is not a problem, right? one of the central political problems in the united states is you have to raise tax revenue. why not raise tax revenue from a part of the economy where you want to discourage activity and use that for education. >> the private sector is sitting on more uninvested cash.
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this is not stock, not money given to owners. >> firms sitting on cash waiting to invest. they are waiting for cues. tacking them, taxing carbon would help give cues to drive investment into clean energy. another way -- >> they are very skeptical about clean energy. you also have to realize it's a terrible investment for the past decade. this is not an easy problem. >> one of the problems is lack of markets. the government could do a lot to fix that by consuming clean energy and vehicles. the federal government is in the u.s. is the single largest consumer of clean energy. if you add state and federal spending, if you look at the percentage of the gdp, the public sector, it's over 1%. >> and what helps is lots of natural gas in the united states. so there's even an alignment with what i think are going to be the economic interests. >> so the problem is that will probably make the unemployment
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problem worse and that lowers the return to investing in a heavy industry, that lowers the average real interest rate and the problem that they face is that the real interest rate is negative and that makes it difficult for us to achieve full employment. so you're making that problem harder by taxing carbon. >> so we don't have to have one -- >> i think that's totally wrong. >> when you have a low real interest rate, typically you get a lot of growth and a lot of employment. >> he's talking about a negative interest rate. >> yeah, but a real interest rate. what a carbon tax will do is drive activity into the things that you want and i agree it will draw it into the low carbon type of activities. and if you couple that with
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shorter working hours you can achieve what you need because you can reabsorb the people who are getting unemployed in the places of the economy that are no longer profitable and capital is fleeing. you've got to do it that way. one of the big problems that we have in this country is that we've had three decades of rising work hours. we had a two 200-hour work increase. it's part of our adjustment to the downturn of 2008 has been to have so much more unemployment than in europe where, you know, most of these countries were able to weather is very quickly and in germany you had virtually no increase in unemployment at all. >> i have to stipulate here, i'm a big fan in how germany has worked but we cannot actually say that europe overall has weathered the 2008 recession with less unemployment than the united states. i mean, countries like spain, italy -- >> the austerity policy.
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when you look at the country -- >> countries like spain and italy -- >> i'm talking about the labor market adjustments. >> they have seen 20%. that's a problem. >> i'm sorry. i didn't hear -- what did you say? >> spain, italy, unemployment around 15, 20%. >> of course they do. >> juliet, hang on, because it is connected to the german point. part of the reason that germany has been able to have export-led growth and be so successful internally, germany is the china of europe. >> i realize that. i made that point about 20 minutes ago. you add shock at the beginning. i'm not talking about the later stage of austerity and self-imposed pain, which is what europe is dealing with right now. but if you look at the ocb adjustment to the downturn and the u.s. has a huge g and p adjustment and loss of unemployment where a lot of
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these other european countries adjust on hours and their unemployment doesn't go up. that's the only point i was making. >> adjust on hours meaning you get something more like job sharing, right? >> it wasn't just germany who did it. quite a few of the ocb countries did that. >> other great concepts that we can actually bring to bear on this, i don't think we can just do one thing. for example, we have about a dozen states right now trying in pieces and bits and starts to mimic the idea of the bank of north dakota which has been around for 100 years. where you say, okay, we're paying taxes and right now pretty much most of our states are keeping that money in big wall street out of state banks. instead, we could create a public institution with a mandate to help small, local banks in the state feed that money back through the economy.
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so you're increasing jobs in the state. you're increasing small business lending at a time when the big wall street banks have no real imperative to lend locally at all. it's not going to be profitable for them without housing equity. you're returning a dividend to the state. >> is it publicly owned? >> yes. it's a public bank. >> it's a way to give policy makers control over their economy which is something people are struggling to be able to do in this time period and to create local job growth which has, if it's done right, climate benefits. >> i think this is a terrible idea. i think that publicly owned financial institutions are a huge mistake. >> tell that to the north dakota bankers. >> hold that thought. hold that thought. hold that thought. we're going to debate public banks. i'm going to thank juliet schor.
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all right. we weren't going to talk about this but then let they're brought up this fascinating thing that people don't know about. there's a state bank in north dakota and it's been around since 1919. it came out of the populous progressive movement. >> the republican government was successful. it's provided $313 million to the state in the last ten years.
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it hasn't been corrupt. in fact, it weathered the financial crisis much better than the public banks. >> it produces loans t lends through small banks in the state to borrows in the state. california is considering it and oregon is considering it. >> get the governments out of banks. why is it -- >> i'm going to stipulate these small examples. it's great that they work and i'm not opposed to those self-contained ones. what i would say is i actually think one of the lessons of the 2008 fng crisis is it is actually really dangerous to have the state and politicians have a direct state in major lending institutions because
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then you have major moral hazards. and the politicians do, too. >> are you referring to fanny and freddie? >> a lot of the europe european state-owned bank have a huge crisis. it's the tip of the iceberg is the european financial and political crisis but underneath that is a huge banking crisis that hasn't fully been resolved and that was driven a lot by the german and london banks that allowed them to do stupid things. they were more leveraged than a lot of the bank and that's argument one and argument two is fanny and freddie. i don't see them as the heart of darkness in the financial crisis but i think they were part of the problem because they were used to solve what should have been a political problem. so i think the issue of redistribution in the u.s. economy, instead of taxing rich people and helping poor people earn more money, what the u.s.
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political system did is lower interest rates and allow poor people to think they were richer because they could take out home equity loans thanks to fannie and freddie. >> all of these discussions run into this question of whether or not the climate system is going to fall apart on us and there needs to be a radical transformation of how we use energy if that's not going to happen. this is not to say that growth is always good. but in the short term, this is what has to happen. if you look at china, because you can use it as a tool for driving investment. i'm not opposed to public finance at all. >> i think we're going to see more experiments, because i
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think it's doing a terrible job of it. the battle control intellectual property. the future of the u.s. economy. that's next. [ laughter ]
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[ male announcer ] every time you say no to a cigarette, you celebrate a little win. nicoderm cq, the patch with time release smart control technology that acts fast and helps control cravings all day long. ♪ quit one day at a time with nicoderm cq. when politicians talk about the future of the economy one thing they seem to all agree on is that the strength comes from our ideas. the power and importance of innovation. >> the unique culture of freedom innovation that flourishes in our country -- >> this country's legacy of innovation. >> american innovation. >> some of these small businesses, the entrepreneurship
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in their hearts inspire me. >> our shared obsession with innovation. >> it's an obsession. the united states is one of the most innovative economies in the world. the u.s. institution grants congress the power to, quote, promote the progress of science and useful arts by securing for limited times of authors and inventors the exclusive right. this idea to protect the rights of american innovators through large and small patent was at one point truly revolutionary. it's been extorted and expanded and they are killing off the one thing that everyone seems to agree, america does right, which is innovate. according to the "new york times" last year, for the first time ever, apple and google spent more money on patent lawsuits and patent purchases
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than on research and due province. think about that. rather than generating actual new ideas. increasingly, the property that really matters in the next economy is int dekt you'll property and the fight over who controls that intellectual property is only going to get more vicious. as a tiny glimpse of what that looks like, a report was put out in favor the liberalizing current copyright law. it's seen by many a form of corporate welfare that hurt the innovation and the losers are new industries that could generate new wealth and added value. within one day of the report which brought attention to it, was scrubbed by the internet and not subject to adequate review. the author of the review has since been fired. joining us now, richard wolffe from international affairs, host
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of economic update and susan crawford, author of the book, "captive audience." great to have you here. >> great to be here. thanks so much. >> so since this is your area of expertise, lee start with you. is our i.p. regime a total disaster. >> this was a great idea at the outset, giving people a limited time in which they own it and exploit it. >> when you step through that logic a little more, why should the government grant -- i come up with an idea and the government grants me an exclusive monopoly over a small period of time. why should the government do that? >> there is deep concern about this idea, actually a lot of fear. but the problem is, people felt that a very short period was a good idea because it goes back to the public.
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the gift was supposed to be the public. after just 14 years. and then after 28 years if you re-upped. now it's life plus 70, which is essentially endless and there's no fair use left as far as we can be tell. the ability of the second innovator, second actor to use this infrastructure and freeflow of information has been been sharply cut back. we've handed a series to autocratic players who are using technical commands to fulfill their own business desires and it's not good for our economy or the future of innovation in american. >> sole the basic idea to get people the ability to make a living as an innovator. you can make a living a as an innovator. >> actually, the basic idea was to get more stuff to the public if you gave an incentive. >> because then you can could
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devote yourself to giving new ideas and creating things and stuff like that. you could make a living as a writer if you could tap copywriting. >> i'm with susan. it doesn't have to be all or nothing. i think it's essentially a good idea but it's gone too far. it's not just with the internet or the media. my dad is a farmer and one of the things that drives him completely crazy is the patent on seeds and fertilizers. >> that's a huge problem for america. that means that the publishers, the people who have put themselves in the middle are making all of the profits and we need americans to do better because of those articles. >> rich rd? >> we have a profit-driven
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society. the presence, the absence of a law, all of these are occasions to try to make money out of it and we've seen this happen in the very evolution, as susan points out. a couple of questions. one, we ought to be more concerned about the benefits to be gained by letting innovations be widely understood and used than by rewarding the innovator. number two, the notion that the innovator is an individual strikes me as biz sflar. the individual is just a moment in that process of research that involves thousands of institutions over a long period of time. they come together in one person but the celebration of the one person who takes the last step as opposed to all of the others is, again, removing the social did i mention of this process and making it an individual. >> or the fact that five people might come up with the same idea. >> and really recognize the single person. >> people are not so pecuniary
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as people imagine them to be. there are a hundred ways of rewarding people who come through with innovation and we ought to explore them. the notion that the only way to get them to do it is by giving them private profit to create them to be an advantage that they couldn't otherwise have, that's a pandering to an economic system that we ought to be questioning, not pandering. >> the thing here that we need to focus on is who get the monopoly. >> that's what i was going to ask. who are the opponents. >> but we face this issue in many parts of american society. we're facing it with internet access as well. we've handed a monopoly for access they are dividing the world up between them and wireless guys. for me that's all secondary. >> explain who those people are. >> i'm sorry. the recording association of
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america and motion pictures association of america have tremendous power in washington. >> let me show an example of this. this is former senator from connecticut, senator chris dodd, who is now head of the mpa. he's telling those in hollywood not to expect money if they don't vote for the stop online piracy act that was pushed by our employer here and the mpa. those who count on, quote, hollywood for support need to understand that this industry is watching very carefully who is going to stand up for them when their job is at stake. don't ask me to write a check for you when you think your job is at risk and then don't pay attention to me when my job is at stake. >> the question i think i want to ask is, this has happened both in copyright and patent where people on the left and right agree with that. the question is, what to do about it? let's talk about that after this.
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we had a big case this year which was ample and samsung over a set of patents. when you think about something as complex as an iphone, there are lots of patents in there. >> hundred hads. >> he a i didn't know this until i stepped through the patent process. it's kind of a remarkable process in that it is the einstein sitting with the diagram and saying yes this is novel and you've come up with this. >> and years go by. there's a timeline in your story as well. >> or in some cases you apply or reject it the first time or tweak the language and then they finally say, okay, fine, here's the patent. so apple sues samsung and says you can't make your smartphone. >> the expense is google is
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announcing it is trying to step back and get out of these wars because they have dozens of litigation pending all over the world and all they are doing is patents, not patent inventions and it's frustrating for the inventors. >> there is a business model in which you just cycle through and try to get a bunch of patents, like spending your pen, frequent. maybe that's a novel thing. you see it steadily shoots up and now it's become this growth industry. you can essentially blackmail people because you have a property claim and then they come out with something and you send them a letter saying we have a patent ongoing like this to minimize an image or breathing or some process that everybody is using. >> two problems here. one, you can box out your
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competition with a threat of this lawsuit but also you're making it very difficult for anybody else to invent something new. everybody's afraid. and that's no good for innovation. >> it's providing the opposite of incentive. if the idea is to secure in limited turn and instead you're creating a situation in which if you invent something you're going to get your butt sued. >> right. >> it's like literally the opposite. so what do we do about it? >> start over. seriously. think very seriously about software patent. that's where a lot of the ridiculousness is coming from. each one of those phones has hundreds of patents. >> wipe it all out? >> we should not have software patents? >> no software? >> you want to help me out on this one? >> i think it's right. that's my and proech. it's extremely come me
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complicated. >> wipe out the software patents. and there's a controversial -- i are remember reading something about this, the business method patents. which is more bizarre. because coming up with a business method is the way capitalism work. you come up with a good business idea, that's what rewards you. i remember reading a case about a place that was selling cereal to college students and got a cease and desist order which had patented the business method of selling people bowls of cereal and milk. >> 40,000 lawyers a year and a lot is driven by litigation. >> can i strongly endorse karl's great idea? because one of the sort of meta things that this discussion makes me think about and our g
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financial discussion is we've had this for two centuries and it's become very, very complicated. our tax system, our financial regulation, our patent system, the way health care works in america. and i think more and more we have to actually be willing to say, you know what, you are going to have to start over in some areas because adding more band-aids and bubble gum, it's not going to work. >> i love the imagery. can we just play for a moment with that. >> barnicles and bubble gum. >> suppose it's not just the patent law. suppose the whole system is a collection of band-aids and ad hoc drugs that interact with one another. so we are having good conversations of intelligent people trying to figure out where they are substituting another band-aid or adding another wrinkle when you're
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saying, stop. maybe we have to rethink from the basis of what's going on. maybe part of our problem is not this or that law or this or that regulation but the way we have a system that responds to regulation. >> can i weigh in on the side of ba band-aids and bubble gum which is that ad hoc solutions and kind of keeping things together -- >> unless you want to start from the beginning. >> on software patents. >> one area that i do disagree with you is the ability to think about public infrastructure which could include commodity banking and it includes internet access, includes, you know, working electricity grid. it's weeks after sandy and two-thirds of the building in
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lower manhattan still don't have phone service. that's because we haven't been working on our infrastructure. we don't have a functioning electricity grid strong enough to carry the country forward. we need a sustainable plan for moving america forward. >> i want to ask you the question of what -- >> that is a free market to operate. that's so we can have -- >> let me ask you -- i want to answer this question about how intellectual property is different. right after this break. with you? lost your appetite for romance? and your mood is on its way down. you might not just be getting older. you might have a treatable condition called low testosterone or low t. millions of men, forty-five or older, may have low t. so talk to your doctor about low t. hey, michael! [ male announcer ] and step out of the shadows. hi! how are you? [ male announcer ] learn more at [ laughs ] hey!
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>> people spend their lives talking about this. it's very similar to property in that you're given a bundle of exclusive rights for a period of time. it's very different in that anybody else can access which means like if i have a pie and i cut the pie take half and i get that half and you can't have it. if i have an idea of making pies, you can have it and there's plenty left over for me. that's the difference between intellectual property. that's a very important difference. that's why they wanted to make sure as quickly as possible america got the benefit of what creators had come up with. >> are there people, other countries right now doing intellectual property in an interesting and he can sitiexci way that we can look at?
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>> so in fact it very important to our foreign policy and we're exporting our way of thinking of intellectual property. >> this is treasury secretary tim geithner slamming china on exactly this. >> we're seeing china continue to be very, very aggressive in a tragedy that they started decades ago which goes like this, we want you to tell to our country, we want you to come produce here. if you want to come produce here, we want to you export from china. if you want to come to produce here, you need to transfer your technology to us. and they have made possible systematic stealing of intellectual property of american companies and have not been aggressive in putting in the protection for the intellectual property that everyone needs. >> this is one of the big objectives is making sure that
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there are legal agreements in place that are going to export our intellectual property regime. >> right. and economic espionage is something that could be draining america of economy. what i'm trying to get is a balance between the public access and the investors incentive and that's where we're completely out of whack. we've using letters of technical power to reuse them, remix them and we may be missing out on a big part of what other countries may get. >> and one of the stories of detroit was that industrial espionage in the auto industry was so intense that that drew everyone to the central location to be involved in the process of building automobiles and an industrial base. and actually go there to steal those ideas. >> fascinatingly, i was doing
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research for a show we did a few weeks ago about energy and i was looking at the oil plain in north dakota. one of the things that is interesting there is that this kind of stealing is totally endemic. it all gets out, right? everyone eventually learns and that probably produces a net positive surplus because of the shared information even though it's shared ostensibly in violation of the secrets. >> the response to geithner is welcome to the world of economic history. what he's complaining about, every single country in its history has done that. he wants to arrest that process because he decides it's not convenient to do that when every country, including us, has done that at some point in history. this is an attempt to play on people as if the outrage has just happened and he wants to
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declaim against it. >> it's like having industrial revolution spread through europe and democracy. one of the interesting thing is that you have industrial revolution go so far and then the state messing things up and the inventors would move to the next european country where they could move. >> people should read the story of how the first rubber plant was smuggled out of brazil by the british. it's an incredible caper. >> this is a nice segway to talking about language of abundance and increasing returns to scale and new ideas and what's the problem with our copyright system and internet access is that it's not allowing more people to discover new ideas and new ways of making a living and that's how you push an economy forward. >> can i can ask the brilliant susan a question? >> actually, no. because we have to go to what is ahead coming up next.
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♪ all right. so what should you know for the year 2013? well, you should know that north carolina republicans who will control both legislative chambers and the governor's mansion next year have vowed to repeal the state's racial justice act which allows for death penalty appeals showing racial factors at work in death penalty cases there. you should know that by the death penalty information center suggests that the rest of the country will rely e less on the death penalty and not more. 213 people were executed but it was down to 9 this year. and 29 states now don't have the death penalty at all or haven't executed anyone in the past five years, and in the states that did not execute anybody including alabama and georgia and louisiana. the center's executive director credits two factors, fear of executing the innocent and the high cost of death penalty
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regimes. you should know that when justice does not motivate, cost effectiveness will suffice. and now in how it takes care of the general public, the affordable health act will crawl to it. and next year, health insurance will become available in a marketplace for which the government will act as a gatekeeper and demanding higher standa standards and lower cost than what is currently offered in the marketplace of life and death. you should know that it is not going to be perfect, but they will be accountable to other factors other than the bottom line. the fight offhealth care will continue. and ten states will be raising the minimum wage along with several cities. the minimum wage is $7.25 an hour and essentially poverty level for family of three.
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and the families representing 58% of new jobs created since the recession according to the law project. and you should know that paying the living wage is not popular in some quarter, but it is one of the few ratchets that we can use to improve the life of working people, and ratchet up the feature of our political economy. if you want to know what our guests think, and i will begin with you professor richard wolffef. >> you should pay attention to a company in minnesota called the marvin window company. they got into the news as they were praised by both president obama and by his opponent mr. romney as paragon corporation. here is what they did. they got through the great crisis of the last five years without laying people off. they had the imaginative idea to share the unemployment among all of the people there, so nobody would have to fall into unemployment. what an interesting idea that both republicans and democrats would celebrate. they also just as interestingly
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made the decision to take a significant portion of their profits and share it among the workers to compensate them even for the little bit of unemployment they had this year. what a wonderful idea. here's the thought. instead of relying on extraordinary family that owns the company to make that decision, just imagine if american enterprises were owned by the workers who worked in them and run by them and gee, they could make that decision and everybody would have the wonderful story that both of the candidates celebrated without e defending on the whim of a particular capitalist. >> i am sure that mitt romney would love that. susan crawford? >> you should know that in front of the d.c. circuit, verizon is claiming it is just like "the new york times" when it carries broadband data, that it is a speaker. that any regulation of its activities is therefore unconstitutional, and this would wipe out all of the communications protection of consumers in pricing and service, and everything. >> wow. >> it is a brazen attempt to turn our first amendment freedoms into their control of
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their tele. huge profits. >> and just when they say it is rating agencies when they give the ratings to aaa. >> and this is a huge impact. >> and you should know that the dynamics of the housing bubble will reassert in 2013. i think that is particularly interesting because people feel that the shock of the last time or the reforms of the financial sector will have done anything about it, and they haven't, and the fundamental liquidity issues are with us. >> and look at expansion of the housing bubble. >> you should know that the focus of the last four years rightly has been getting the economy out of recession and into growth. i'm bull ish on the u.s. economy for 2013 provided that the cliff issues are avoided, but that means that the focus should and i think that they will be turning to issues of redistribution which is essential, because there are a lot of reasons to think that
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even as the economy moves to growth, the distributional problems will be worse and not better. >> i want to thank my guests. richard wolffe, susan crawford, carl smith from the university of north carolina at chapel hill, and chrystia freida. >> thank you. and throughout 2012, it has been an amazing year, and we will be back next week when filmmaker oliver stone will be here to talk about his new series "the unhotold history of the united states." and coming up next is the one and only melissa harris-perry, and we will see you next week here on "up." new years clutter is no match for someone with big ideas. with a new project in mind, some how-to knowledge to give us an
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